Posts Tagged ‘Iron Ore’

The recent rally in commodity prices has surprised many market participants and has greatly supported the stock market’s rebound. It has also made bulls out of a number of former stock market bears, as one of its side effects was to cause an improvement in market internals. But will the rally actually continue? As always, there are arguments – for & against.

Cheaper oil prices don’t just come ‘out of the blue.’ Other commodities used for raw materials, construction & economic growth, have been languishing too. Real median incomes remain stagnant since the Great Recession. These are all signs that the recovery we are seeing is mainly asset inflation brought on by cheap debt, not economic growth.

The economic slowdown in China is hammering prices of some raw materials, driving down industrial commodities from copper to iron ore and coal – exacerbated by the vicious cycle of credit-collateral-contraction. So what is the cheapest way to play with potentially limited downside?